上海交通大学：《供应链管理 Supply Chain Management》课程教学资料_Case Studies_Sample Works_Research Report_2012OpenResearch_Eliska Nyr nen_RFID Usage in Inventory Management.pdf_大学文库

Supply Chain Management Eliska Nyronen 7100309074 RFID Usage in Inventory Management RFID techonology offers two types of RFID tags:active and passive.The first option is battery sourced and can communicate to long distances(over 100 meters).But because of its costs,it's not so used.The second option has more lower costs,obtains the needed energy to operate from the reader signal and can communicate as far as tens of meters.It offers many sizes and shapes from flexible to solid and encapsulated.Passive RFID tag is the middle option between active RFID tag and barcode. There are many researches that study the effects of RFID for example in inventory inaccyracy and in shipment tracking.In this report I focused to study the researches about inventory management (e.g.inaccuracy,stock outs,replenishment). RFID could be implemented for example to trancking products,keeping record of the inventory level and reducing inaccuracy and stock outs.But why use RFID and not barcodes?RFID has few advantages over barcode:frequent monitoring,non-line-of-sight reading,bulk registration and data storage.Readers can offer to the system more real-time information about the inventory level and they do not have to see the tag itself.Thus we can examine more efficiently the needs to replenish the inventory and the inventory errors.Other benefits that we might have are for example shortened lead time,product availability,asset utilization,safety issues regarding the products and also customer satisfaction. There might be several possible reasons for inventory accuracy:shrinkage (e.g.theft), misplacement and transaction error (e.g.scanning error).This leads to differences between the invetory levels in the computer system and the physical inventory,and might then also lead to out of stock.Thus we need something more than just the barcodes in the packages to make sure we have more correct information.For this purpose RFID seems to be most promising solution and with it we can reduce the inaccuracy. RFID Usage in Inventory Management 1(4)

Supply Chain Management Eliska Nyrönen 7100309074 RFID Usage in Inventory Management RFID techonology offers two types of RFID tags: active and passive. The first option is battery sourced and can communicate to long distances (over 100 meters). But because of its costs, it's not so used. The second option has more lower costs, obtains the needed energy to operate from the reader signal and can communicate as far as tens of meters. It offers many sizes and shapes from flexible to solid and encapsulated. Passive RFID tag is the middle option between active RFID tag and barcode. There are many researches that study the effects of RFID for example in inventory inaccyracy and in shipment tracking. In this report I focused to study the researches about inventory management (e.g. inaccuracy, stock outs, replenishment). RFID could be implemented for example to trancking products, keeping record of the inventory level and reducing inaccuracy and stock outs. But why use RFID and not barcodes? RFID has few advantages over barcode: frequent monitoring, non-line-of-sight reading, bulk registration and data storage. Readers can offer to the system more real-time information about the inventory level and they do not have to see the tag itself. Thus we can examine more efficiently the needs to replenish the inventory and the inventory errors. Other benefits that we might have are for example shortened lead time, product availability, asset utilization, safety issues regarding the products and also customer satisfaction. There might be several possible reasons for inventory accuracy: shrinkage (e.g. theft), misplacement and transaction error (e.g. scanning error). This leads to differences between the invetory levels in the computer system and the physical inventory, and might then also lead to out of stock. Thus we need something more than just the barcodes in the packages to make sure we have more correct information. For this purpose RFID seems to be most promising solution and with it we can reduce the inaccuracy. RFID Usage in Inventory Management 1(4)

Supply Chain Management Eliska Nyronen 7100309074 B.C.Hardgrave et al.researched the effectiveness across product categories:"First,the effectiveness of RFID tagging in improving inventory management is not the same across all product categories.We found that tagging was effective for some categories,with estimates for the reduction in the percentage of stockouts ranging from 21%to 36%.--The evidence indicates that tagging is most effective for product categories that have predictable record inaccuracy which causes stockouts."In their case study one out of five categories,the ready-to-assemble furnitures, did not improve accuracy with the usage of RFID.These products have low sales velocity,high item cost and low density compared to the other products.In a previous study conducted by Hardgrave et al.(2010)'they came to a following conclusion:"The product categories that showed the greatest decrease in inventory inaccuracy were those in which the products had higher sales velocity,lower item cost,higher sales volume,higher inventory density,and higher product variety..”[6] Even though we would use RFID technology,it is still good to have physical auditions few times a year.How often the physical auditions are done varies from store to store.Some stores,such as Kodin Ykkonen (a interior decoration and home goods store),count their inventories every day,but just some product categories.For example they do the physical audit for Chirstmas decorations in January,when the inventory level should be the lowest.[7]Other stores might do it just once a year (a mandatory action)and then rely on the information given by the IT system. Reducing inventory inaccuries lead to reduced stockouts,because the inventory level infomation is more real-time and ordering decisions are done in right time.Thus this also leads to increased customer satisfaction.P.M.Agrawal and R.Sharda researched the relationship between out of stocks and how often the physical and IT system inventories were aligned.Compared monthly alignment to annual alignment the reduction in stockout loss was significant.[2]Ofcourse the costs per year due to alignment increase as the number of alignments per year increase,so we have to try the optimal and/or suitable frequency for each case.But still RFID usage cost should be less than the losses in turnover because of inventory inaccuracy. Hongyan Dai and Mitchell M.Tseng listed two types of RFID benefit:visibility and prevention.The Hardgrave BC,Aloysius JA,Goyal S(2010),RFID-enabled visibility and retail inventory record inaccuracy: experiments in the field.Working paper,University of Arkansas RFID Usage in Inventory Management 2(4)

Supply Chain Management Eliska Nyrönen 7100309074 B. C. Hardgrave et al. researched the effectiveness across product categories: ”First, the effectiveness of RFID tagging in improving inventory management is not the same across all product categories. We found that tagging was effective for some categories, with estimates for the reduction in the percentage of stockouts ranging from 21% to 36%. – – The evidence indicates that tagging is most effective for product categories that have predictable record inaccuracy which causes stockouts.” In their case study one out of five categories, the ready-to-assemble furnitures, did not improve accuracy with the usage of RFID. These products have low sales velocity, high item cost and low density compared to the other products. In a previous study conducted by Hardgrave et al. (2010)1 they came to a following conclusion: ”The product categories that showed the greatest decrease in inventory inaccuracy were those in which the products had higher sales velocity, lower item cost, higher sales volume, higher inventory density, and higher product variety.” [6] Even though we would use RFID technology, it is still good to have physical auditions few times a year. How often the physical auditions are done varies from store to store. Some stores, such as Kodin Ykkönen (a interior decoration and home goods store), count their inventories every day, but just some product categories. For example they do the physical audit for Chirstmas decorations in January, when the inventory level should be the lowest. [7] Other stores might do it just once a year (a mandatory action) and then rely on the information given by the IT system. Reducing inventory inaccuries lead to reduced stockouts, because the inventory level infomation is more real-time and ordering decisions are done in right time. Thus this also leads to increased customer satisfaction. P.M. Agrawal and R. Sharda researched the relationship between out of stocks and how often the physical and IT system inventories were aligned. Compared monthly alignment to annual alignment the reduction in stockout loss was significant. [2] Ofcourse the costs per year due to alignment increase as the number of alignments per year increase, so we have to try the optimal and/or suitable frequency for each case. But still RFID usage cost should be less than the losses in turnover because of inventory inaccuracy. Hongyan Dai and Mitchell M. Tseng listed two types of RFID benefit: visibility and prevention.The 1 Hardgrave BC, Aloysius JA, Goyal S (2010), RFID-enabled visibility and retail inventory record inaccuracy: experiments in the field. Working paper, University of Arkansas RFID Usage in Inventory Management 2(4)

Supply Chain Management Eliska Nyronen 7100309074 former is about the alignment of physical and IT system inventories and the latter concerns the reduction of inventory errors with other supporting systems.Without RFID there might exist Bullwhip effect because of the inaccuracies.In this their study they came to this conclusion: "visibility is preferable to industries with higher uncertainty of inventory discrepancy and prevention is preferable to industries with higher value of products".[3] RFID technology development is not yet finished and there are still many opportunities for researchers and developers.Fully automated replenishment process with the usage of RFID is not yet ready,because the inaccuracies can not be detected by RFID alone as the research of C.Condea et.al.shows.[4]Maybe in the future this problem will be solved somehow and this could be possible.But for now it might be a helpful assistance to manual work in shelf replenishment Earlier I mentioned the different reasons for inaccuracies and misplacements could be quite easily solved by tracking and locating the products.D.Grau et.al.studied the automatic tracking through shipping and receiving processes and did field experiments in a construction company.[1]In another study J.Song et.al.research the localisation of RFID tagged objects.[5]Both of these are not so easily conducted just with RFID.Both studies gave positive results although RFID has its disadvantages:its operation may vary depending on the material where the tag is and RFID can not provide very accurate location information.For short read distance tags the location can be approximated,but it still has to rely on communication network.GPS could be another option,but it is quite expensive and not economically realizable and still needs the help of other identification technologies.The combination of the low cost RFID tags and some mobile RFID readers with GPS should probably be the best solution for localisation.And for tracking the incoming products some kind of RFID reader gate could work fine. There still much to research about RFID,but it already offers many helpful advantages.Only the future and the imagination of researchers will show how far can make it. RFID Usage in Inventory Management 3(4)

Supply Chain Management Eliska Nyrönen 7100309074 former is about the alignment of physical and IT system inventories and the latter concerns the reduction of inventory errors with other supporting systems. Without RFID there might exist Bullwhip effect because of the inaccuracies. In this their study they came to this conclusion: ”visibility is preferable to industries with higher uncertainty of inventory discrepancy and prevention is preferable to industries with higher value of products”. [3] RFID technology development is not yet finished and there are still many opportunities for researchers and developers. Fully automated replenishment process with the usage of RFID is not yet ready, because the inaccuracies can not be detected by RFID alone as the research of C. Condea et. al. shows. [4] Maybe in the future this problem will be solved somehow and this could be possible. But for now it might be a helpful assistance to manual work in shelf replenishment. Earlier I mentioned the different reasons for inaccuracies and misplacements could be quite easily solved by tracking and locating the products. D. Grau et. al. studied the automatic tracking through shipping and receiving processes and did field experiments in a construction company. [1] In another study J. Song et. al. research the localisation of RFID tagged objects. [5] Both of these are not so easily conducted just with RFID. Both studies gave positive results although RFID has its disadvantages: its operation may vary depending on the material where the tag is and RFID can not provide very accurate location information. For short read distance tags the location can be approximated, but it still has to rely on communication network. GPS could be another option, but it is quite expensive and not economically realizable and still needs the help of other identification technologies. The combination of the low cost RFID tags and some mobile RFID readers with GPS should probably be the best solution for localisation. And for tracking the incoming products some kind of RFID reader gate could work fine. There still much to research about RFID, but it already offers many helpful advantages. Only the future and the imagination of researchers will show how far can make it. RFID Usage in Inventory Management 3(4)